M/S NEW HORIZONS LTD. AND ANOTHER versus UNION OF INDIA AND OTHERS

Citation: [1994] SUPP. 5 S.C.R. 310 · Decided: 09-11-1994 · Supreme Court of India · Bench: S.C. AGRAWAL, M.K. MUKHERJEE

cites 4 · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
c 
D 
E 
F 
G 
H 
MIS NEW HORIZONS LTD. AND ANOTHER 
v. 
UNION OF INDIA AND OTHERS 
NOVEMBER 9, 1994 
[S.C. AGRA WAL AND M.K. MUKHERJEE, JJ.] 
Constitution, of India-Article 14--Tender for compiling, printing and 
supplying telephone directories-Tenderer a joint venture with one of its 
constituents having the requisite experience-Tenderer offering royalty 
with large margin of difference-Tender Evaluation Committee not 
considering tender on technical considerations, that tenderer did not have 
experience fn their own name and had not substantiated their capacity to 
execute the work-Whether arbitrary-Held, a certain measure of 'free 
play in the joints' is necessary for an administrative body functioning in an 
admistrptive sphere-Jn commercial transaction, requirement of experience 
must be construed from standpoint of prudent businessman-It is not the 
name of the company, but the background, persons in control and their 
capacity to execute the work which is relevant-On facts, held that tenderer 
is joint venture with one of its constituents possessing requisite 
experience-F!irther, on facts, only successful tenderer to establish 
experience-Also, having regard to large margin of royalty offered by 
tenderer, Tender Evaluation Committee's refusal to consider the tender, 
held, arbitrary and irrational 
Company Law-Lifting the corporate veil-On facts, as stated in the 
tender, appellant-company, held, is joint venture .. 
The Department of Telecommunications, Hyderabad, invited 
sealed tenders for printing, binding and supply of diredories in English 
for the years 1993, 1994 and 1995. The tenderer was required, inter 
alia, to specify the royalty amount for each issue offered by him and to 
substantiate his experience with documentary proof. Five tenders were 
received and considered by the.Tender Evaluation Committee, and the 
contract was awarded to respondent 4. The appellant challenged the 
award of contract, and contended that it was eligible, and met the 
criteria laid down and was competent to compile, print and supply 
telephone directories as per the invitation of tender. The experience of 
its foreign collaborator/equity holder was retied upon by the appellant 
in support of its claim. It was submitted that the contract was awarded 
to respondent 4 on extraneous considerations and was violative of 
310 
NEW HORIZONS LTD. v. U.0.1 
311 
Article 14 of the Constitution. It was further contended that since the A 
matter involved public revenue, the tender of the appellant containing 
the highest offer could not be rejected on the hypertechnical plea that 
the appellant itself had no experience. In countering the challenge, it 
was contended for the respondents that the offer of the appellant had 
not been considered because it had not submitted evidence to de-
monstrate its experience. 
The High Court negatived the challenge holding that the 
experience of shareholders was entirely different from the experience 
B 
of the company itself; that the principle of lifting the corporate veil 
could not be invoked by the company; that, in this case, there was no 
joint venture as such but only a certain amount of equity participation C 
by a foreign company in the appellant's company; that the non-
communication of the reasons was not fatal; the bid of the appellants 
having been rejected at the threshold, the authorities could not 
consider the question of a higher amount of royalty. 
Allowing the appeal, this Court 
D 
HELD: 1. The refusal of the Tender Evaluation Committee to con-
sider the tender of the appellant-company on the ground that the 
condition regarding experience as laid down in the tender notice was 
not fulfilled is not sustainable in law or on the facts, and is arbitrary 
and irrational. (325-B) 
E 
2. In the matter of entering into a contract, the State does not stand 
on the same footing as a private person. The action of the State in the 
matter of award of contract has to satisfy the criterion of Article 14. 
Moreover a contract would either involve. expenditure from the state 
exchequer or augmentation of public revenues, and consequently the F 
discretion in the matter of selection of a person for award of a contract 
has to be exercised keeping in view the public interest involved in such 
selection. The government must act in conformity with the standards or 
norms which are not arbitrary, irrational or irrelevant. 
It is 
recognized that a certain measure of "free play in the jo

Excerpt shown. Read the full judgment & AI analysis in Lexace.